Athens, Greece. Morgan Stanley has initiated coverage of Greece’s banking sector with a positive stance, saying the investment case for Greek lenders remains compelling despite a strong rally in recent years. The investment bank maintained overweight recommendations for Alpha Bank, Eurobank and Piraeus Bank, while assigning a neutral stance to the National Bank of Greece and CrediaBank.
Economic backdrop
Morgan Stanley said the Greek economy continues to offer one of the strongest growth profiles in Europe. In the report, whose findings were shared by Greek business outlet Newmoney, the bank said the economy remains supported by robust domestic demand, investment activity and inflows of European funds.
The bank forecasts Greek gross domestic product growth of 2.1 per cent in 2026 and 2.0 per cent in 2027. Investment is expected to increase by around 5 per cent annually, while Greece is also projected to maintain high primary surpluses.
Morgan Stanley estimates that the country’s debt-to-GDP ratio will decline to 131.5 per cent by 2027.
Implications for banks
The report said the favourable macroeconomic backdrop should support continued growth in corporate lending, annual deposit growth of between 3 per cent and 4 per cent, and stronger fee income through the expansion of asset management and insurance activities.
It also said that the tight labour market should help keep credit risk costs at low levels. Morgan Stanley further highlighted that Greek banks are among the most interest rate-sensitive institutions in Europe, a characteristic that continues to support net interest income.
